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TIR 04-12: Penalty for Failure to File, Report or Pay in the Prescribed Format

Recent legislation authorizes the commissioner to impose a penalty on taxpayers that fail to "conform any filing, data transfer or payment with the method prescribed by the commissioner." G.L. c. 62C, § 33(g), as amended by c. 143, § 2, Acts of 2003.

The commissioner has the statutory authority to require taxpayers to file returns and to make payments of tax "in such manner, format and medium" as he shall prescribe. G.L. c. 62C, § 5. The commissioner has exercised that authority by requiring certain taxpayers to file and/or pay electronically in order to increase Department operating efficiencies and reduce the costs of maintaining both paper and electronic compliance and processing systems. See, for example, TIR 02-22 and TIR 03-11. Under revised section 33, a taxpayer that does not comply with the prescribed method for filing, data transfer, or payment will "be considered not to have made the required filing or the required payment." G.L. c. 62C, § 33 (g). The statute permits the commissioner to impose a penalty of up to $100 "for each improper return, document or data transmission, and for each improper payment."

Penalties may be imposed for nonconforming returns, data transfers, or payments due for tax years beginning on or after January 1, 2005. The commissioner may assess the penalty by issuing a notice to the taxpayer setting out the filing period and tax type or filing requirement affected, the amount of the penalty, and the reason for the penalty. Penalties may be waived or abated in whole or in part if the filer shows that the failure to properly file or pay is due to reasonable cause and not to willful neglect. See G.L. c. 62C, § 33(f) and Administrative Procedure 633 (II).